Arch is a demonstrated leader in mine safety, with an average lost-time incident rate during the past five years that is nearly 2.5 times better than the industry average. Arch subsidiaries have won 10 Sentinels of Safety awards — the nation’s highest honor for excellence in mine safety — in the past 11 years.
In the environmental arena, Arch subsidiaries achieved a perfect compliance record in 2021, with zero notices of violation from state mining regulators. In each of the previous four years — from 2017 through 2020 — Arch received just one notice of violation, versus an average of 16 annually by 10 of its largest U.S. competitors. In the area of water management, Arch subsidiaries took more than 134,000 water quality measurements in 2021 and recorded zero exceedances for a 100 percent compliance record. That compares to just one minor and temporary exceedance in 2020, which equated to a compliance record of 99.999 percent.
In May 2021, Arch joined ResponsibleSteelTM, the steel industry’s first global not-for-profit multi-stakeholder standard and certification initiative. Arch is the first and only U.S. metallurgical coal producer to join the organization to date. Arch views ResponsibleSteelTM as an important forum for collaboration with its steel-making customers as they pursue a more sustainable value chain, and as they seek to lower — and ultimately reduce to zero — the carbon intensity of the steelmaking process.
Enterprise Risk Management
The evaluation and management of risk is incorporated into Arch’s approach to governance and risk management. Arch uses a long-standing Enterprise Risk Management (ERM) process to assess risks that may affect the company’s ability to achieve its strategic and financial goals. The ERM process, which is overseen by the company’s board of directors and administered by senior management, cultivates a risk-aware corporate culture at Arch.
Our objective for environmental, social, and governance (ESG) performance is to work towards positive outcomes for our business and stakeholders. Our process for integrating risk management throughout the business includes identifying, evaluating and addressing ESG risks and opportunities on a regular basis. The risks and impacts associated with our business require effective collaboration among departments, business units and external stakeholders.
Because the company’s environmental and operational activities are inextricably intertwined, our chief operating officer acts as our environmental lead with the assistance and support of the company’s entire operational and environmental leadership teams. The chief operating officer reports directly to the chief executive officer, who provides further oversight and direction in this critical area of performance, and both the chief operating officer and the chief executive officer report to the board of directors on critical areas of environmental performance and on key environmental metrics, at a minimum, as a part of every regularly scheduled board meeting. Our senior vice president of strategy leads the company’s broader ESG efforts, reports directly to the CEO, and reports to the board of directors and the ESG and Nominating Committee of the board on a regular basis.
Compliance Management System
For more than a decade, Arch has been operating in conformance with a Compliance Management System (CMS) that was modeled after the ISO 14001 Environmental Management System standard and that met EPA’s rigorous expectations for the company’s compliance assurance program. Under our CMS, we require each subsidiary facility to maintain full compliance with all applicable environmental regulations and to monitor that performance in alignment with the “management plan” model of Plan/Do/Check/Act. Each operation regularly reviews its applicable regulatory framework and its environmental operating risks, ranks those risks and mitigates accordingly. Each operation regularly performs self-evaluations of compliance performance, and those self-evaluations are supplemented by corporate environmental compliance and third-party audits, undertaken to minimize the risk of noncompliance and environmental harm. The CMS has built-in measures to drive continuous improvement, with emphasis on risk reduction and environmental performance improvement.
Annual environmental improvement plans are developed by each facility and incentives for outstanding environmental compliance performance are awarded. Underpinning the overall environmental program, Arch utilizes an industry-leading environmental management information system (EMIS) to assist in managing and tracking environmental data; compliance obligations; audit findings and corrective actions; and regular internal reporting of environmental activities. Arch continues to build out the capabilities of its EMIS to improve the efficiency of compliance assurance and to reduce risks of environmental harm.
All of our mining operations maintain Environmental Management Systems (EMS) that align to ISO 14001:2015. We continue to evaluate the potential future certification of our environmental management systems to conform to the internationally recognized ISO 14001 standard.
Arch dedicates significant operational resources to all aspects of environmental compliance assurance and risk management in an effort to enable environmental regulations to be fully addressed and to enable environmental resources to be protected. Beyond daily attention to such details, Arch engages third-party experts to review the work of our operations in order to provide additional, external assurance that the practices and compliance measures we employ are accurate and reflective of industry standards and best practices.
Examples of operational areas to which Arch applies regular third-party review and assurance include:
- Design, construction, operation, maintenance and monitoring of refuse management areas, including both slurry impoundments and dry piles
- Design, construction, operation, maintenance and monitoring of refuse slurry pipeline systems
- Deployment and implementation of the Arch Resources Environmental Management System
Each year, Arch retains a third-party consultant to conduct an extensive and comprehensive review of its operating, safety and environmental practices. In each of the past two years, Arch retained Hawcroft Consulting International Group — a leading global loss control engineering firm for the mining industry — to conduct this audit at each of the company’s subsidiary operations. While the results were highly positive, the extensive individual mine reports — which typically exceeded 100 pages — identified multiple opportunities for improvement. Arch and its operating subsidiaries have put these recommendations to use in making enhancements to their critical operating, safety and environmental processes, in keeping with the organization’s disciplined commitment to continuous improvement.
In addition to third-party audits, each facility is continuously subject to regulatory inspections, with regulators such as the U.S. Department of Labor’s Mine Safety & Health Administration (MSHA), which has inspectors at each of our mines on an almost daily basis. In 2021, Arch’s operations were subject to 2,164 inspections shifts by MSHA.
State regulators overseeing the federally delegated Surface Mining Control and Reclamation Act (SMCRA) programs are required by regulation to perform monthly inspections at a minimum, but many of our facilities have weekly or even more frequent inspections. Arch Resources maintains one of the best SMCRA compliance records in the industry, with zero violations in 2021 and only one violation across the entirety of the company in each of the previous four years. In 2021, Arch’s operations were subject to 1,259 inspections by federal and state inspectors.
Other federal and state regulators randomly perform compliance and oversight inspections, including regulatory inspections required under the Clean Air Act (air permits), the Clean Water Act (NPDES permits) and the Resource Conservation & Recovery Act (waste management), as well as inspections required by the U.S. Nuclear Regulatory Commission (nuclear sources) and the U.S. Alcohol, Tobacco, Firearms and Explosives agency (explosives management). In addition, Arch operations routinely conduct inspections with state fire marshals and local and regional emergency response coordinators, and conduct mine disaster drills at select operations.
Arch maintains its diligence on all matters of environmental and safety management by performing corporate compliance and best management audits across all subsidiary facilities. The corporate functional management team provides both the guidance on requirements for full compliance, and periodically makes site visits to review practices; documentation and recordkeeping; and external reporting. All of these external oversight efforts are welcomed and encouraged by our subsidiary facilities and management teams, who recognize that additional eyes and expertise engaged in reviewing our practices and compliance efforts act to further reduce risk and to maintain diligence in protecting the environment.
Arch has been engaged in and achieving industry-leading performance around ESG principles for years. As early as 2017, one of our major customers, pursuant to its own ESG program initiatives, arranged to have a third-party assurance consultant (Intertek) visit one of our subsidiary operation’s mines — Beckley — to perform a workplace conditions assessment, as part of a sampling of its upstream vendors. Upon completion of its review, Intertek assigned a score of 100 percent to the Beckley mine, and reported to the Arch team that it had never previously issued a score of 100 percent to another operation.